The excitement & enthusiasm of investors for investing in startups is far from over despite a few recent setbacks, including Paytm IPO fiasco. Accel, a venture capitalist firm that is known for backing startups at an early stage, has announced the launch of the $650 million fund with an aim to invest in startups across India as well as Southeast Asia.
The new fund for startups is launched after a gap of three years when it racked up $550 million. The firm reaffirmed its commitment to support startups that are looking to raise funds during the seed, early, and pre-seed stages, as per senior management of Accel.
The well-known VC firm has so far committed over $2 billion for startups in the region. This is also the second-largest fund by a VC firm committed for the region after Sequoia India which raised $1.35 billion in 2020 to support startups in the early stages and those that are growing.
Interestingly, Sequoia is set to close a larger fund with an estimated value of $2.8 billion.
“We will continue to back companies in sectors such as consumer tech, global software as a service companies (Saas), healthcare and ecommerce, ” said Anand Daniel, partner, Accel India.
The overall valuation of Accel’s portfolio companies is estimated at more than $100 billion. Accel’s team has a knack for identifying promising startups during their early stage. 16 startup unicorns – having a valuation of more than $1 billion – were backed by Accel during the early stage.
Danial has also confirmed that the firm plans to invest 90% of the latest corpus in early-stage startups seeking investment.
With the competition growing in the race to identify and roping in promising startups at a very early stage, every VC firm has launched various programs specially designed for a different level of startups. Accel has launched its seed investment program called Atoms which supports startups during the idea stage. It also operates “SeedToScale” which is a program to tap startups at the very beginning of their journey.
Accel is not the only one designing such programs; Sequoia launched a program called “Surge” at the beginning of 2019, which is also meant to identify funding-seeking startups during seed and pre-seed levels.
As the world is moving towards Crypto and Web 3.0 Accel has set its eyes on fledging startups in that area as well.
Abhinav Chaturvedi, a partner at Accel said that the company is increasingly looking to support entrepreneurs active in Crypto and the Web3 segment.
We will see applications that bridge the gap between Web2 and Web3 and will double down on our focus on Crypto,” Chaturvedi said.
Accel’s big bet in the cross-border enterprise software and software-as-a-service ( SaaS) sector paid off well. The enormous success of Freshworks IPO – Accel invested in – on Nasdaq last year infused positive waves among entrepreneurs in the sector. However, due to the recent crash in tech stocks across the world as well as the Indian market, several startups in the tech sector have delayed their IPO plans. Chaturvedi however, believes that early-stage investors in India will continue to take the IPO-exit route. finds IPO exits the most suited ones for early-long-term investors, while M&As and the secondary sale of shares are also one of the favorite exit strategies for early investors.
The possibilities and opportunities in the capital market for tech companies have increased after SEBI relaxed norms for the listing. While startups are excited about the new norms, many late-stage private tech companies are also gunning to make the most of the opportunity now. The conservative mindset of stock market investors towards tech companies is fading off and the market is perfectly aligned to welcome tech companies to the stock market.
Accel has also created a pool of capital, amounting to anything between $4 billion and $4.5 billion, for startups in the growth stage that need a bigger war chest to compete with well-funded companies.
The size of India-dedicated funds is constantly increasing with each passing year. Global investors are showing more confidence in India and pouring more to back startups than ever before. At the same time funds such as 3one4 Capital, A91 Partners, Chiratae, Blume, Stellaris have created a bigger pool of capital to invest in Indian startups at the early stage.